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Tariffs

Dealmaking Hits Decade-Low as Global Uncertainty Bites

Strategic Insights

— 2 min read

Dealmaking dropped to a decade low in the second quarter, excluding the early months of the pandemic, as Donald Trump's "liberation day" tariffs extended a run of uncertainty that has forced dealmakers to reassess their strategies. According to the London Stock Exchange Group, the total number of deals announced in the three months to June 30 fell to about 10,900. This figure, the lowest since the start of 2015, has dealt a significant blow to the expectations of dealmakers who had initially anticipated a more conservative White House would lead to a wave of takeovers. Instead, companies and investors have had to navigate a more precarious geopolitical backdrop, with the US's announcement of wide-ranging tariffs and ongoing conflicts in the Middle East driving volatility in markets.

Key Takeaways:

  • The total number of deals announced in the second quarter fell to about 10,900, the lowest level since the start of 2015, excluding the second quarter of 2022 when Covid-19 lockdowns reduced the number of deals to 10,600.
  • The value of transactions held steady from the first quarter of the year at $969bn, propped up by a handful of strategic megadeals.
  • Deals worth more than $10bn have risen by three-quarters this year, with top transactions in the second quarter including Cox's $35bn takeover of Charter Communications, a $33bn take-private of Toyota Motor's biggest subsidiary, and a consortium led by Abu Dhabi National Oil Company's $24bn acquisition of Australia's Santos.
  • The uncertain outlook for economic growth, inflation, and the dollar has acted as a drag on the private equity industry, making it more difficult to value assets.
  • Companies and investors have had to navigate a more precarious geopolitical backdrop, with the US's announcement of wide-ranging tariffs and ongoing conflicts in the Middle East driving volatility in markets.
  • Dealmakers have had to adapt to a more cautious attitude in the boardroom, with companies opting for fewer but larger transactions in a bid to mitigate risk.

Statistics:

  • 10,900: The total number of deals announced in the second quarter, the lowest level since the start of 2015, excluding the second quarter of 2022.
  • 10,600: The number of deals announced in the second quarter of 2022, when Covid-19 lockdowns reduced the number of deals.
  • $969bn: The value of transactions in the second quarter, which held steady from the first quarter of the year.
  • 75%: The rise in deals worth more than $10bn this year.
  • $35bn: The value of Cox's takeover of Charter Communications in the second quarter.
  • $33bn: The value of the take-private of Toyota Motor's biggest subsidiary in the second quarter.
  • $24bn: The value of Abu Dhabi National Oil Company's acquisition of Australia's Santos in the second quarter.

Sources:

  • London Stock Exchange Group (no date)
  • Skadden (no date)
  • Paul Weiss (no date)

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